BUT SPOTIFY IS PAYING 70% OF GROSS TO ARTISTS, ISN’T THAT FAIR? NO, AND HERE’S WHY…

Spotify is not paying sustainable rates for the cost of goods. Look – it’s like this, if something cost you $100 to make, and someone else sells it for $10… it doesn’t matter that you are getting 70% of the gross, you’re still over 90% unrecouped on a per unit basis. This is the problem with Spotify, is that it undervalues the true cost of goods (including R&D, etc).

Artists agreeing to streaming their music on Spotify are essentially agreeing to sell albums for One Dollar and Songs for Ten Cents… Oh Wait, Spotfiy actually pays way less than that… (calculated on a per stream basis).

This is why arguments about marginal percentages miss the point completely. It’s about simple math and simple economics.

The cost of music is not in the distribution of music (which is cheap). The cost of music is in the human labor of the CREATION of music (which is expensive).

The cost of goods is greater than the marginal cost to distribute those goods. Stop confusing the product with the container.

The CREATION of music is also more than the cost of RECORDING music. The cost of music is in the sustainable needs of the human labor for food, shelter, clothing, etc.

Spotify can not scale and work at current economics… One More Time…

SPOTIFY MATH FOR THOSE OF YOU AT HOME WITH CALCULATORS:

Just show us the math where streaming scales, we’ll wait. Spotify has 3m paid in the US at $10 each.

$10 x 12 mos = $120 per year. Pay out 70% that’s a gross of $84 per year per subscriber. Simple Math.

That $84 per sub is in revenue to all artists in rights holders. Times that by 3m and you get a whopping $252m a year in a $7b business.

Multiple that by 10, to get 30m subs @ $10a month and that’s only $2.5b a year… and that’s a big IF Spotify ever gets to 30m paid in the USA… and IF they do, that’s ONLY 2.5b in revenue against the $7b now…

So you effectively cut the revenue to everyone by 1/2 to 2/3rds… how does this math work without raising the price of subscriptions? It doesn’t.

It’s just math.

 

calculator

 

 

 

 

 

 

 

 

RELATED:

Music Streaming Math, Can It All Add Up?

Who will be the First Fired Label Execs over Spotify Fiasco & Cannibalization?

Streaming Is the Future, Spotify Is Not. Let’s talk Solutions.

UNSOUND : Zoe Keating Interview : Part 1 [VIDEO]

Zoe explains her background and how she became a DIY artist. She also explains how streaming services like Spotify don’t work out so well for independent artists.

 

 
RELATED:

Musicians POV : 1,000 True Fans (an answer)

If the Internet is working for Musicians, Why aren’t more Musicians Working Professionally?

Music Streaming Math, Can It All Add Up?

Bloomberg ALMOST get’s it right about Spotify and Streaming… ALMOST…

Bloomberg almost gets it right. While Megan McArdle correctly identifies the problem with Spotify in the context of current market economics she fails to recognize the source of the downward pressure on online music distribution, Ad Funded Piracy.

Lou Reed and Dead Kennedys Go Public Against Ad Funded Piracy with Facebook Posts

As we have said many times, we don’t object to streaming as a business model, we only object to the poor revenue and compensation economics that these services currently provide. In other words, the economics of music streaming are a direct symptom of the larger disease of Ad Funded Piracy – this is why we hope to see more artists speaking up about the actual source of the problem as pirate sites are a for profit business that do not compensate artists at all.

BLOOMBERG:

In other words, while the cost side has improved, the revenue side has gotten worse even faster. People simply aren’t willing to pay very much for recorded music anymore. If you’re an artist, and especially if you’re a record label, that’s very bad news. Naturally, some artists want to shoot the messenger, blaming Spotify for their paltry payments. But Spotify is not the problem. The market is the problem. Spotify is just the messenger telling them what the market is now willing to pay for their songs.

We have a suggestion for any streaming music company executives who should happen across this post – if you really want to help musicians, why not start educating the media and musicians about the cause and source of why streaming economics are really so bad, Ad Funded Piracy.

Let’s join forces and aggregate the power of the community to restore a fair, ethical and balanced marketplace to music so that artists, songwriters and performers can have sustainable careers, and you too.

READ THE FULL STORY AT BLOOMBERG:
http://www.bloomberg.com/news/2013-12-09/spotify-isn-t-why-musicians-can-t-make-a-living.html

RELATED:

Google, Advertising, Money and Piracy. A History of Wrongdoing Exposed.

Over 50 Major Brands Supporting Music Piracy, It’s Big Business!

16 Artists That Are Now Speaking Out Against Streaming… | DMN

We’re seeing more and more artists speaking up and speaking out against the unsustainable economics of the exploitation economy. We also hope more artists will also be speaking up about the Ad Funded Piracy that creates the downward pressure to justify these bad business models.

There used to be one band with the courage to do this sort of thing: Metallica. Now, there are dozens of high-profile artists, with outspoken critics like David Lowery and Thom Yorke leading a previously-unthinkable level of protest against streaming and content devaluation. Here are just a few of those voices that emerged in 2013.

READ THE FULL POST AT DIGITAL MUSIC NEWS:
http://www.digitalmusicnews.com/permalink/2013/12/02/artistspiracy

SXSW Panels for Artists Rights – Show Your Support @ SXSW Panel Picker

Please show your support to advance the conversation for Artists Rights by voting for these two panels being considered for this year’s SXSW. We hope to see you in Austin. Deadline for voting is Friday August 31st.

###

MUSIC: “Who’s Ripping Me Off Now”
http://panelpicker.sxsw.com/vote/3736

Description

In June, a blog post by musician David Lowery set off a firestorm. Written to an intern at NPR who admitted to not having paid for the 11,000 tracks in her collection, the post generated more than a million views in just one week and numerous media stories.

In its wake, musicians, fans and the industry were all re-evaluating long held beliefs. Who is “the man” today? Can the Internet be both innovative and ethical? Who speaks for the artists? And what obligation does the fan have to his or her favorite artists (if any).

Join David Lowery, Cake’s John McCrea and experts from music and tech policy as they try to answer these timely and controversial questions.

Questions Answered

1. Is the new boss (tech) worse than the old boss (labels)?

2. What policy changes need to be considered to make the internet fairer for music creators

3. Can artists make a living without making money from recordings?

4. Who’s profiting from Spotify?

5. What obligation does the music fan have (if any) to the music creator?

###

INTERACTIVE: “Innovative, Open, Ethical & Sustainable Internet”
http://panelpicker.sxsw.com/vote/6170

Description

Everyone agrees the internet needs to be Open and encourage Innovation, but does it have to be “permissionless innovation” as some are proposing? The internet and digital technology have opened up many new opportunities for artists, but it has also opened up new opportunities for those who wish to exploit those artists.

This panel asks the difficult questions about the balance of rights of all citizens, including the rights of the individual citizens who are themselves both creators and consumers participating in both sides of the debate. The reality of contemporary online content distribution is that a blind eye has been turned to enterprise level, mass scale, for profit, businesses who are not including creators participation in the monetization of the value chain. This is both unethical and in the long term unsustainable.

This panel will explore mutually beneficial solutions for all stakeholders WITHOUT the need for new or additional legislation to do so.

Questions Answered

1. Why is premissionless innovation necessary? Consent is the cornerstone of civilization. How do we find the balance in the rights of all citizens to BOTH privacy and protection of individual rights such as copyright? Perhaps through the use of a master rights registry or database would make it possible to not require case by case “permission” but still have rights granted by consent.

2. Why isn’t there a way to create online indie record stores that specialize in specific genres superserving those consumers (death metal for example)? Rights Holders need to work with developers to create an easy “One Stop” rights licensing solution to encourage competition and innovation without cumbersome requirements. Ideally there would be an online equivalent to old school “One Stops” who sold records to indie stores before they developed credit lines with the distros directly. SNOCAP?

3. Why does there seem to be so much confusion between the what is the actual freedom of expression and wanting to illegally exploit that very expression? Ice-T’s “Cop Killer” or 2Live Crew’s “Me So Horny” are actual artistic expressions protected by the Constitution. The illegal coping and distribution of those expressions without the creators permission is simply exploitation without consent or compensation to the artists themselves.

4. The mutual respect granted by intellectual property rights allows individual creators the freedom to determine what permissions they wish to grant and at what price. No one has to pay that price, but the creator is entitled to set it.

5. Why are consumers willing to pay more for Fair Trade coffee but not willing to pay for music, movies and other content? Public attitudes about creators rights are not aligned with the reality of most people struggling to sustain professional creative careers. All this begs the question, if the internet is working for musicians, why are less musicians working professionally now than prior to the internet. The promise of empowerment has failed.

###